Getting the most out of a PCP agreement at the end of your arangement.

robson947

So my partner has/had a PCP arrangement with VW she's been paying £197.03 for the last 4 years for a VW  1.2 Polo Beats edition car (17 Plate) 42000 miles.

PCP isn't something I'd heard of, I used websites such as this to learn more about it.

So her 4 years were coming up and we decided that we don't need 2 cars, so it made perfect sense to lose one.

Our options with the car were;

• Settle the 'balloon' (settlement figure) price of £4800 (Let's be honest, we don't have £4800 to hand).
• Refinance with VW the remaining £4800 over 2 years.
• Get a loan (similar to above|)
• Part exchange the car with VW.
• Hand the car back.

We opted to hand the car back, but in the back of her mind she was worried about having to pay out any damage that had been caused over 4 years to VW. There's a small dent on the drivers door, a scuff/scratch to the bumper, 2 out of 4 alloys were scuffed. Usual niggles that happen to cars.

We headed to our local body shop and asked for a quote to fix the door and bumper. He quoted us £360 total to repair it. (Please note, this is an approved body shop, which was highly rated).

We booked the car in for the following week.

Our reasoning made total sense, main dealers are bund to charge way more so her mind was somewhat at ease.

Before the end of the PCP arrangement we needed to tell VW 28 days before what we planned to do. (It was the 28th April 2021 the car was going back as far as we were concerned on the 27th May 2021).

I heard on an advert 'We Buy Any Car' (could've been on the radio) words like valuation, pay off finance.

Which got me thinking, is there any value left in this car? Could we sell it?

I looked at 'Parkers' dead quick and easy and saw a value of approx £5500-£8000 (depending on mileage etc).

Knowing full well the efforts to sell a car (private) was going to be a challenge, so we booked to visit 'We Buy Any Car' the online valuation turned out to be approx £6600 (don't forget there's damage).

The guy (Tim) asked about 2 sets of keys, service history, proof of settlement figure from VW and offered to give us £5800. 
'We Buy Any Car' would pay the settlement figure, take approx £80 admin fee and transfer us the remaining money.

We've suddenly gone from paying a few hundred to receiving a few hundred.

Leaving with our knowledge and a 4 day price guarantee (plus we needed my car to travel home and spare key).

We looked at other companies that did this, there's a few (you can Google them) they all said similar amounts in their quote.

My partner booked to visit Arnold Clark for a 2nd face to face valuation. She booked because despite adding the damage to the car, the valuation came in really good.

 Valuation online approx £6600 when we got there he explained that the next service would need a cam belt replacement, £250 (Valuation is now £6350) and because the car is desirable to the company, he's been authorised to add an additional £500.

£6850 (take off the £4800 settlement/balloon figure) We're now up £2050.

This seems like a total no brainer. The deal was completed and it'll take a few days (Bank Holiday Weekend) but we've managed to totally flip a negative situation into a positive.

I'm not saying this option will work for everyone, we were lucky there was some value in the car and that the balloon price was low initially.

But if you or someone you knows walks away £10 up, worry free, then it's a win.

Sorry if I've gone on forever, seems like a lot now I've read it back.

motorguy

Thats a great result!

Definitely worth checking around, as you did.

Sandtree

Your options with PCP are always:

• Pay balloon
  • cash
  • loan
  • refinance
• Sell car
  • Part exchange
  • Sell to dealer/WBAC etc
  • Private sale
• Hand car back

Its also worth checking the rules on damage before considering paying for repairs else you may end up paying for a repair that would fall within allowable damage.

Unfortunately, in some ways, my balloon payment was about £5k more than the forecourt price of such cars so definitely a case of handing back.

Grumpy_chap

robson947 said:

'We Buy Any Car' 

We've suddenly gone from paying a few hundred to receiving a few hundred.

My partner booked to visit Arnold Clark for a 2nd face to face valuation. She booked because despite adding the damage to the car, the valuation came in really good.

 Valuation online approx £6600 when we got there he explained that the next service would need a cam belt replacement, £250 (Valuation is now £6350) and because the car is desirable to the company, he's been authorised to add an additional £500.

£6850 (take off the £4800 settlement/balloon figure) We're now up £2050.

This seems like a total no brainer.

It is.
You've done exactly the correct thing.
Thanks for sharing as this 'real-life' example will be useful to many others - expect to see your post linked to many times.

fred246

It's no use to me. I don't do PCP.

AdrianC

Sandtree said:

Your options with PCP are always:

• Pay balloon
  • cash
  • loan
  • refinance
• Sell car
  • Part exchange
  • Sell to dealer/WBAC etc
  • Private sale
• Hand car back

Its also worth checking the rules on damage before considering paying for repairs else you may end up paying for a repair that would fall within allowable damage.

Unfortunately, in some ways, my balloon payment was about £5k more than the forecourt price of such cars so definitely a case of handing back.

It's simpler even than that.

As far as the PCP financier is concerned, there are just two options...

1. Pay balloon, take ownership of car.
2. Hand car back, walk away.

Everything else Sandtree lists there is just what YOU can do AFTER you (or somebody on your behalf) pays the balloon.

happyc84

Well done on getting a deal that works for you and your partner. Great that you got different valuations, and well done to Arnold for keeping their side of the deal.

Biggus_Dickus

fred246 said:

It's no use to me. I don't do PCP.

I don’t either,... and I don’t profess to have any in-depth knowledge of PCP but the OP’s thread starter appears (to me at least!) to be a very well constructed résumé of the why’s and wherefores that need to be considered when the payment term ends.

I found it interesting and informative;...the very essence of the forum’s money-saving ethos. It was certainly more informative than the rubbish that I usually post. 

sheslookinhot

fred246 said:

It's no use to me. I don't do PCP.

I’m  sure most visitors to this forum will be really reassured to know that.

BOWFER

The 'beats' edition is a nice car, that's what I had from 2018-2020 before deciding I wanted the Gti.
Not sure I agree a dented door.,scuffed bumper and 2 x scuffed alloys is "usual" though, I've never that that much damage on any car at any time. 
Still shows you what's possible with PCP, this thing about being 'locked into one make' in a myth.
Yes the dealer make it easy for you to just take on another VW, but that doesn't mean it's compulsory.

motorguy

AdrianC said:

Sandtree said:

Your options with PCP are always:

• Pay balloon
  • cash
  • loan
  • refinance
• Sell car
  • Part exchange
  • Sell to dealer/WBAC etc
  • Private sale
• Hand car back

Its also worth checking the rules on damage before considering paying for repairs else you may end up paying for a repair that would fall within allowable damage.

Unfortunately, in some ways, my balloon payment was about £5k more than the forecourt price of such cars so definitely a case of handing back.

It's simpler even than that.

As far as the PCP financier is concerned, there are just two options...

1. Pay balloon, take ownership of car.
2. Hand car back, walk away.

Everything else Sandtree lists there is just what YOU can do AFTER you (or somebody on your behalf) pays the balloon.

And whos concerned about the financiers options?

If the O/P had take the black and white simplistic view they'd now be out £,£££s as they've said they didnt have the funding / capability to buy the car outright which would have left them with option 2.

The O/P didnt need to take ownership of the car, ownership went straight to the dealer, putting £2,050 directly in to the pocket on the way.